The purchase by a subsidiary of some of its shares from noncontrolling stockholders results in the parent company's share of the subsidiary's net assets:
A) increasing.
B) decreasing.
C) remaining unchanged.
D) increasing, decreasing, or remaining unchanged.

Question

Quizplus · Accepted Answer

When a subsidiary buys back some of its shares from noncontrolling stockholders, the parent company's share of the subsidiary's net assets can increase, decrease, or remain unchanged depending on the terms of the buyback and the accounting methods applied. This is because the transaction affects the ownership percentage and possibly the valuation of the subsidiary's net assets.

The Purchase by a Subsidiary of Some of Its Shares